An extremist, not a fanatic

September 17, 2013

Accepting inequality

Why aren't voters more concerned about rising inequality? For example, in the UK since the mid-80s, the share of income going to the top 1% has risen from around 8% to over 13%. But during this time the proportion of people agreeing that the government should redistribute income has fallen slightly - with larger falls among younger and working class people.

It could be that this tolerance of inequality reflects an acceptance of neoliberal economics. People are now more inclined to believe that "wealth creators" need high incentives to work hard, and that as they do so we all become richer, so inequality is in our self-interest.

Kris-Stella Trump got subjects to compete in pairs to solve the most anagrams in four minutes. The pairs were randomly divided so that in some pairs the winner got $9 and the loser $1 whilst in others the winner got $6 and the loser $4.However, unknown to the subjects, the competition was rigged so that they always narrowly lost to one of Dr Trump's colleagues. After the game, the losers were asked how they would have divided the prize money. And here's the thing. The losers who got $4 thought it fair a fair split was (on average) $6.15-3.85 but the losers who got just $1 thought a fair split was $7.77-$2.23. In other words, actual inequality shapes our perceptions of fairness. Dr Trump says:

Public ideas of what constitutes fair income inequality are influenced by actual inequality: when inequality changes, opinions regarding what is acceptable change in the same direction.

There are two reasons for this, says Dr Trump. One is the status quo bias; a form of anchoring effect causes us to accept actually existing conditions. The other is the just world effect. We want to believe the world is fair, and if we want to believe something, it's very easy to do so. This is the system justification theory described (pdf) by John Jost and colleagues. There is, they say, "a general psychological tendency to justify and rationalize the status quo" which is "sometimes strongest among those who are most disadvantaged by the social order."

And this in turn poses a challenge to democratic egalitarians. If this is right, the fact that there's public support for - or at least acquiescence in - inequality is no evidence whatsoever for the justice of that inequality. It might be, therefore, that we cannot achieve justice by democratic methods.

Comments

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It's unfortunate that we can't achieve justice by democratic methods, because undemocratic methods almost systematically prove to be poor alternatives.
The good point in democracy however is that, although quite imperfect, it is a self-correcting system (just like the market). The equilibrium may never be optimal, but extreme situations are only temporary.
Switzerland will soon vote on a referendum initiated by young leftists that would limit the top remuneration in a corporation to a 1:12 ratio with the lowest remuneration in that corporation.
The odds were initially high against that referendum, but it now appears that its fate is not necessarily doomed.
This would be a striking example of the self-correcting effect of the political system imposing a correction to a market failure.

This raises an interesting thought experiment: if a citizens' basic income were to be introduced, and this increased people's sense of personal security as well as potential (i.e. being able to take the risk to try a new career), would this erode the tolerance of inequality?

In other words, would a CBI be a major psychological step towards equality (across multiple dimensions) as well as a fiscal one?

Another reason for accepting inequality is that people at the bottom of the pile nowadays enjoy things that kings and queens could only have dreamed about in the middle ages: television plus a hundred different radio stations to listen to – all with vastly better quality music than was available in the middle ages.

Then there is health care, which again is far better quality than anything available in the middle ages.

I seem to remember a survey which asked people if they’d given up their television in exchange for a million pounds. About half said they wouldn’t. So you could argue that people on benefits who have a TV are worth a million.

Is there any proof whatsoever that government redistribution of income would reduce inequality, though? Intuitively, it would more likely increase the income of the largest of the 1% - the government itself - at the expense of everyone else.

Doesn't the data suggest something more complex? That the losers in a more equal society want a society more equal than losers in a more unequal society; but that those in a more equal society want to increase inequality somewhat and those in a more unequal society want to reduce it quite a bit.

That would suggest that there is some political mileage in calling for a more equal society in a very unequal one, just not as much as an egalitarian may like

I wouldn't despair so much about the possibility of democratic change. One reason people lack the capacity to oppose inequality effectively is that they simply never hear the arguments against inequality and against the idea that unequal earnings are deserved. They are propagandized on a daily basis by a corporate-owned entertainment industry that pushes the message that poor individual outcomes are always a consequence of a failure of individual virtue. That appears to be the message of about 90% of "reality shows".

However, it is also important that we don't just appeal to "justice", since the sense of justice is a mysterious faculty which varies from person to person. Inequality is a dysfunctional social condition that undermines the capacity for democracy and destroys the political power of those at the bottom; and it is a dysfunctional economic condition that prevents a society from achieving its full economic potential.